We’ve all heard the classic reasons to buy a house; “It’s the
American Dream,” or “It is yours to change and decorate
to how you like.”
Those are some emotional reasons, now for a practical
benefit:
Tax Breaks!
When the beginning of the year rolls around, and it is time
to reconcile with Uncle Sam, you will be thankful that you own rather than rent.
All of the mortgage interest you paid during the year is tax
deductible up to a $1,000,000,000 mortgage! When you itemize your tax return you can deduct the interest
paid during the year.
For a loan payment of $1,200 per month you could save
somewhere in the neighborhood of $3,700 in taxes for the year. Check out this
Alllaw.com article about the Tax Benefits of Owning a
Home including some great examples of how a mortgage can help your tax
situation.
Did you know that even a home equity loan has tax breaks
associated with it? As you begin to pay down your loan and the value of your
house increases, you create more equity. You can then borrow against that value
to pay down other bills or do home improvements. That loan interest, in
addition to your mortgage, is also tax deductible.
If you are currently renting and are in a position to
purchase a home, you may want to stop giving away your tax deductions to the
landlord. You know he/she is thanking you every year when they are reconciling
with Uncle Sam.
If you had extra money coming your way from the IRS after
doing your taxes this year, how would you spend it?
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